Mortgage Banker Magazine August 2022

AUGUST 2022 MBS PRIMER ORIGINATOR CONNECT DATABANK MortgageBanker MAGAZINE A PUBLICATION OF AMERICAN BUSINESS MEDIA VA LOANS Need To Be CLEARER BUZZ CONTACTLESSABOUTMORTGAGES SCORE YOURSELF A RAISE

AUGUST 2022 MBS PRIMER ORIGINATOR CONNECT DATABANK MortgageBanker MAGAZINE A PUBLICATION OF AMERICAN BUSINESS MEDIA VA LOANS Need To Be CLEARER BUZZ CONTACTLESSABOUTMORTGAGES SCORE YOURSELF A RAISE

PROVIDING COUNSEL TO THE FINANCIAL SERVICES INDUSTRY FOR MORE THAN THIRTY YEARS SERVING THE REVERSE MORTGAGE INDUSTRY SINCE ITS INCEPTION WASHINGTON DC | DALLAS TX | IRVINE CA 202.628.2000202.628.2000 202.628.2000 SERVING THE MORTGAGE BANKING COMMUNITY FOR MORE THAN THREE DECADES

FHFA OFFICEANNOUNCESOFFINANCIAL TECHNOLOGY

With CIRT 2022-7, which became effective June 1, 2022, Fannie Mae will retain risk for the first 55 basis points of loss on the $19.8 billion covered loan pool. If the $109 million retention layer is exhausted, 24 insurers and reinsurers will cover the next 335 basis points of loss on the pool, up to a maximum coverage of $664 million.

• Facilitate interagency collaboration with other regulators to enable information sharing and partnership opportunities; and

FANNIE MAE EXECUTES TWO CREDIT INSURANCE RISK TRANSFER TRANSACTIONS

FHFA invites feedback on all aspects of the Request for Information within 90 days of publication, no later than Oct. 16, 2022. Input should be submitted electronically or via mail to the Federal Housing Finance Agency, Office of the Director, 400 7th Street, S.W., 10th floor, Washington, D.C., 20219.

MortgageBanker Submit your news editorial@ambizmedia.comtoIfyouwouldlikeadditionalcopies of Mortgage Banker Magazine Call (860) 719-1991 or email info@ambizmedia.com www.ambizmedia.com © 2022 American Business Media LLC. All rights reserved. Mortgage Banker magazine is a trademark of American Business Media LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: American Business Media LLC 88 Hopmeadow St. Simsbury, CT 06089 Phone: (860) info@ambizmedia.com719-1991 STAFF Vincent M. Valvo CEO, PUBLISHER, EDITOR-IN-CHIEF Beverly Bolnick ASSOCIATE PUBLISHER Christine Stuart EDITORIAL DIRECTOR David Krechevsky EDITOR Keith Griffin SENIOR EDITOR Mike Savino HEAD OF MULTIMEDIA Katie Jensen, Steven Goode, Douglas Page, Sarah Wolak STAFF WRITERS Rob Chrisman, Nir Bashan, Joe Welu, Marty Green CONTRIBUTING WRITERS Alison Valvo DIRECTOR OF STRATEGIC GROWTH Meghan Hogan DESIGN MANAGER Christopher Wallace, Stacy Murray GRAPHIC DESIGN MANAGERS Navindra Persaud DIRECTOR OF EVENTS William Valvo UX DESIGN DIRECTOR Andrew Berman HEAD OF CUSTOMER OUTREACH AND ENGAGEMENT Tigi Kuttamperoor, Matthew Mullins MULTIMEDIA SPECIALISTS Melissa Pianin MARKETING & EVENTS ASSOCIATE Kristie Woods-Lindig ONLINE ENGAGEMENT SPECIALIST Lydia Griffin MARKETING INTERN Ben Slayton FOUNDING PUBLISHER

“When used responsibly, fintech has the potential to improve borrowers’ experiences with the mortgage process by reducing barriers, increasing efficiencies, and lowering costs,” said Director Sandra L. Thompson. “The new office will help advance effective risk management as FHFA evaluates applications of fintech in housing finance, as well as in compliance, and regulatory activities.”

In particular, the office will:

Fannie Mae announced that it has executed its seventh and eighth Credit Insurance Risk Transfer (CIRT) transactions of 2022. As part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2022-7 and CIRT 2022-8 transferred $1 billion of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $21 billion of insurance coverage on $709 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions.

”We appreciate our continued partnership with the 24 insurers and reinsurers that have committed to write coverage for these deals,” said Rob Schaefer, Fannie Mae vice president for capital markets. The covered loan pool for CIRT 2022-7 consists of approximately 64,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $19.8 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired in September 2021. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls.

• Establish ongoing outreach through the regulated entities, promoting awareness and understanding of housing finance fintech and innovation;

REGULATORY CORNER

• Support the agency in developing strategies for FHFA’s regulated entities to advance housing finance fintech and innovation in a safe and sound, responsible, and equitable manner;

• Serve as an Agency resource for innovations, general trends, and emerging risks in housing finance fintech.

The Federal Housing Finance Agency announced the establishment of the Office of Financial Technology. This office will serve as a centralized source of information to support FHFA in addressing emerging risks and advancing Agency priorities related to the adoption and deployment of financial technology (fintech).

In conjunction with the establishment of the Office of Financial Technology, FHFA is soliciting public input on the role of technology in housing finance, broadly seeking to understand the current landscape of innovation throughout the mortgage lifecycle and related processes, risks, and opportunities.

• Engage with market participants, industry, nonprofits, consumer groups, and academia to facilitate the sharing of best practices of housing finance fintech and innovation;

ORIGINATORS AND LENDERS NEED TO PAY HEED TO POSSIBLE IMPACTS.

Remember in the “old days” when the Fed didn’t sop up all the new issuance, and then some, of residential agency mortgage-backed securities? When rates were allowed to fluctuate with the market, and weren’t artificially held down? Pre-Quantitative Easing? We find ourselves in that environment, and then some, and originators and lenders need to payInattention.thepast the Federal Reserve wasn’t generally known for its transparency. That has changed in recent years, and now nearly every week Fed Presidents are out speaking and voicing their thoughts on the economy and the direction of interest rates. Based on the fact that payrolls are very strong as we move through the summer of 2022, but economic growth is moderating, and inflation is well above its targeted rate, analysts believe that the Fed will begin to sell small pieces of its mortgage-backed security holdings at some point this year. Key numerical indicators and public statements from various Fed officials over the last month or so back this up, as it appears that the U.S.’s economic recovery, after being buoyed by an improving housing market and increases in household spending, is outweighed by inflationInterestconcerns.rates continue to be a discussion topic in the lending industry. Jobs and housing drive the economy in the United States, and the U.S. economy added a stronger than expected 528,000 jobs in July. The unemployment rate held steady at a healthy 3.6%, giving the Fed no reason to deviate from its plan for aggressive rate hikes. Investors may have backed off a bit from overriding recession fears, as the strong jobs report and a recent sharp decline in prices for oil and other commodities allowed for a somewhat higher possibility that the U.S. economy could achieve a soft landing. Investors cheered signs that the central bank was committed to preventing price pressures from becoming entrenched, even if that came at a cost of slowing the U.S. economy. In addition to the employment statistics, the Federal Open Market Committee released the minutes from its last meeting.

MBS HOLDINGS

MBS

INNOVATION PREDICTING

WHEN THE FEDERAL OPEN

COMMITTEE CHOOSES

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ROB CHRISMAN

By ROB CHRISMAN, CONTRIBUTING WRITER, MORTGAGE BANKER MAGAZINE Life After Quantitative Easing

FOMC policymakers judged that an increase of 50 or 75 basis points “would likely be appropriate at the next meeting (later in July)” given the current economic outlook. They also “recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.” With the potential for the firmer EXACTLY WHAT MBS SPREADS ARE GOING TO DO IF AND MARKET TO SELL ITS IS TRICKY.

policy to slow growth, Fed officials also removed language from the June policy statement that “indicated an expectation that appropriate policy would result in a return of inflation to 2% and a strong labor market.”There was also discussion on steps to shrink the central bank’s balance sheet, a strategy known as quantitative tightening. Not only has the Federal Reserve been buying securities issued by the U.S. Treasury, but throughout much of 2020, 2021, and even into 2022 the Fed has been purchasing agency mortgage-backed securities. Many believe that the Fed will begin to sell these holdings, in which case the laws of supply and demand suggest that prices of MBS will go down, and rates up. The majority of observers tend to focus on employment data, but the current state of inflation will dictate the moves by the Fed. In terms of target numbers, the Fed is going to be wary of any rate that isn’t 2.5% at this point. The figures to look for are those released as part of the Personal Consumption Expenditures index, which provides a broad measure of price changes in consumer goods and services, and though they rarely result in dramatic headlines, there’s no question that they too play a role in the Fed’s moves. Predicting exactly what MBS spreads are going to do if and when the Federal Open Market Committee chooses to sell its MBS holdings is tricky. At least the end of QE1 some years ago provides a expirationLookingtemplate.attheofQE1in the second quarter of 2010, spreads saw steady widening due to the end of the purchase program, with paydowns from the Fed portfolio entering the market, European macroeconomic trends (which prompted widening in most spread products), and convexity flows from servicers serving as other influential factors. It’s reasonable to predict that spreads would follow the same trajectory.Origination volume will probably drop off as rates rise, reducing overall MBS supply, but demand is projected to change as well. Overseas investors and money managers, from whom demand declined over 2012, could very well improve following the end of asset purchases, and analysts are reasonably confident that REITs will emerge as the primary source of new demand, followed by banks. These predictions are of course very prone to change, as it appears at least for the time being that the Fed will be focused on taming inflation without plunging us into a recession. It could be a bumpy landing.

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According to Bee, the data is encrypted before being processed on the main blockchain network, the execution is without bias and is agnostic to the data it’s processing or its value to the transaction.

‘NETFLIX OF MORTGAGES’ Wood says that the app is targeting consumers who “live on their phones.” In other words, younger homebuyers are the app’s demographic. So far, Wood said that beta testers are comparing the app to Uber and Venmo, some even going as far as to deem Bee the ”Netflix of mortgages” because of the ability to essentially stream a mortgage on-demand.

By SARAH WOLAK, STAFF WRITER, MORTGAGE BANKER MAGAZINE

Gambling On A Fully-Mobile Mortgage Future

DEVELOPER OF BEE APP CLAIMS AN ENTIRELY CONTACTLESS PROCESS COMING SOON.

TECHNOLOGY CONTINUED ON NEXT PAGE

Wood has a background in finance as a loan officer. He’s also dabbled in the areas of mobile app development and blockchain technology, previously working for a software development company that built white-label mobile apps for some major brands such as Neiman Marcus, Home Depot and Moe’s Southwest Grill. Wood got the idea for Bee while working as a loan officer and constantly being asked if his company had a mobile app. “Sadly, I would have to tell them no,” said Wood. The app promotes itself as a contactless way of completing a mortgage in under 10 minutes, with the app being able to process between 70% and 80% of origination data without any loan officer involvement. Preapproval allegedly takes just minutes and real-life loan updates are sent via the app’s

C

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Founded in September 2020 by Wood, the founder and CEO of the app, Bee recently released their beta version on June 9 and secured $2.5 million in investment interest via Stonks. That’s up from 2021’s $1.7 million backed by 844 individual investors. So far, the app has about 10,000 downloads in its beta format.

urtis Wood is promising his new Bee app will deliver a completely contactless mortgage process. To boot, it will also make acquiring customers one-third less expensive. Has he developed what some are calling the Uber of mortgages? Bee, which is the first mortgage app using Web3 technology, is coming to market in November. It is designed to be a contactless, fully-digital mortgage assistant, built on artificial intelligence, machine learning and blockchain technology. Web3 technology processes data instead of loan officers and processors for about 80% of files. The company claims that it will be able to acquire customers at one-third of the cost compared to other lenders. Web3 is a trusted decisioning protocol that can be used instead of a loan officer or processor to process and decision data.

’ —Curtis Wood

In other words, Borrego says that Bee could offer more competitive interest rates to their users for their home mortgages. “I imagine because mortgages are just a subset of the larger finance industry that some sort of project will emerge, but most of what I have seen to date has been around creating NFTs for the deeds to properties, and allowing home sales to occur using crypto as a form of payment,” Borrego said. Borrego says that it seems like they are already tackling bias-fre executions. Since Web3 would allow Bee users to have control over their data and what is shared at the time of application, Borrego says that it could potentially move towards the removal of bias from the application process. The primary hurdle to a tech stack that can power a mobile mortgage is the decisioning protocol. If a loan officer is needed in any way to process the 1003 data, then it’s not a mobile mortgage process the buyer can do whenever they want from wherever they want–like they can order a ride with Uber or buy stocks with Robinhood without having to go through a human taxi dispatcher or stock broker. All digital lenders today use a human loan officer and processor as their primary decisioning protocol for the uniform residential loan application. For users that don’t want to be totally hands-free from the mortgage process, Wood says that the app offers a chat option–which resembles Instagram’s direct message function–for users to talk in real time with a certified loan officer. Wood has no qualms about kick starting his app as a recession looms in the distance. “Some of the most successful companies in history were started in recessions including Microsoft, IBM, HP, GE, GM, Disney, Hyatt, Publix, Trader Joe’s, FedEx, and Google, Facebook and Salesforce,” Wood said. CONVENIENCE Wood said that Bee’s convenience caters towards first-time homebuyers, specifically millennials and Gen Z. who are already used to doing everything on their phones. “Mobile adapters for apps are already in the marketplace. Basically everything done in personal finance is mobile, and eventually everything will trend to be mobile,” Wood said. The app is currently supported by Byrdie, a custom loan origination software (LOS) enhanced with Web3 technology. The Jacksonville-based app plans to launch for Florida users at the end of September.

“We’re building this app from the ground up and can foresee [SOC2] certifications becoming a requirement as finance continues to become mobile,” said Wood. “Ten years ago, five of the top 10 lenders did not exist. The mortgage industry is undergoing accelerated changes that only happen once in a generation.”

generation.happenchangesacceleratedismortgageTheindustryundergoingthatonlyonceina

Allen’s background in security makes him a crucial asset to Bee, as the app holds sensitive consumer data like banking information and property value. Wood said that the company is currently undergoing a SOC2 certification, which is a voluntary compliance to double the app’s security. With this certification, Wood says that Bee will exceed bank-level security.

CURTIS WOOD

Recently, Bee has expanded its board of directors, adding user engagement expert Bryan Schroeder, who is currently the director of Global Market Solutions at Facebook, and Ken Allen, who has over 20 years of experience leading risk management and fraud-related departments for organizations like Equifax, Western Union, and Capital One.

portal. As the broker, Bee is the primary and only point of contact for borrowers with each of the lenders they work with. Connor Borrego, chief product officer at UniPro, Inc., said that if Bee is offering conventional mortgages as a reseller, they could potentially resell mortgages that were being offered by crypto lending platforms.

Also on Bee’s board are Bryan Schroeder, who serves as user engagement expert and also works as Director of Global Marketing Solutions at Facebook. According to Wood, Shroeder is helping Bee designers create the ideal user experience for getting a mortgage. Wood anticipates that the app will be released to the general public around November following the Florida launch. “Although our audience has been only a handful of specific mortgage customers, the feedback is overwhelmingly positive,” said Wood.

‘Ten years ago, five of the top 10 lenders did not exist.

Bee’s website advertises a team of industry experts with 13 years of experience in mortgage lending, eight years of working in blockchain and 12 years of real estate experience. Wood is currently the only loan officer on the team due to the app’s limited beta trial, but expects to hire a slew of loan officers within the next two months.

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“We’ve made major steps over the past few years in trying to build a program that veterans can be proud of,” said John Bell III, executive director of the Loan Guaranty Service for the U.S. Department of Veterans Affairs.

By STEVE GOODE, STAFF WRITER, MORTGAGE BANKER MAGAZINE

he good news is that U.S. military veterans have access to home loan programs that can save them thousands of dollars over traditional home loans, as a reward for serving their country. The bad news is that too many veterans don’t know about the program or have misconceptions about it. Now the Veterans Administration is out to reverse that lack of knowledge and dispel misconceptions about what is available to current and former members of the country’s military branches.

GROWING SEGMENT BENEFITS BOTH VETS AND BROKERS.

STILL WORK TO DO A May report by the Navy Federal Credit Union and Operation Homefront highlighted the value of VA loans. Operation Homefront is a national nonprofit whose mission is to build strong, stable, and secure military families so they can thrive — not simply struggle to get by — in the communities they have worked to protect, according to its website. A survey of 1,001 veterans found that many of them had misconceptions about the administration’s programs that prevented them from realizing some or all of the benefits. The findings included: 49% of active duty military and 31% of veterans believe that they can only use a VA loan49%onceof active duty military and 22% of veterans believe that VA loans have higher interest rates Only 32% of veterans know that no down payments are required for VA loans and 49% believe that they have to put down 20%. An additional 37% believe that a 30% or more down payment is required. 59% of veterans believe that VA loans have longer processing times and 49% believe that they are inferior to conventional loans.

VA Loans Need More Awareness

Bell said that improving access to the VA’s services is one of the biggest changes that have been made. The administration has worked hard to modernize the process to get away from the notion that it’s “your grandfather’s VA.” That includes streamlining the mortgage loan process. Bell said that an eligibility confirmation that took 20 days two years ago, now can take minutes, with 95% of approvals made within three days. The administration is also increasing its training staff from 2 to 12 full time people to work with borrowers and lenders as both parties have begun to embrace the opportunities available to them. “Last year we hit an all-time record since 1944 with 444,000 purchase loans,” Bell said. “This year we are only about 4% off even with rising interest rates.” Bell noted that the VA has also worked with 1,600 lenders who have written at least one VA mortgage.

MAKING THE PROCESS BETTER

The same, Bell said, is true of the veterans in recent times. “What we are hearing, once we educate, once they are armed with information to bid, it certainly helps them,” Bell said. “They just want more, that’s something we want to help with.”

SUPPORTING CONSTITUENTSTHEIR

Regardless of the overall lack of knowledge, Veterans Administration officials said that in fiscal 2021 the VA’s loan guaranty service set another record, registering more than 1.4 million VA-guaranteed home loans. The market share of VA loans has also risen from 1% to 10% in the last 10 years, officials said. While the VA did not participate in the survey, Bell said the results will still help them see where they need to continue to improve veterans’ knowledge about what’s available to them..

Despite the misconceptions, 80% of those who have used a VA loan rated their satisfaction at 6 or 7 on a scale of 1 to 7.

THE RESULTS “We get kudos all the time from the real estate community,” he said. “Most of the issues have been with lenders not wellversed in the government lending space.”

LAST YEAR WE HIT AN ALL-TIME RECORD SINCE 1944 WITH 444,000 PURCHASE LOANS. THIS YEAR WE ARE ONLY ABOUT 4% OFF EVEN WITH RISING INTEREST RATES. JOHN BELL III, VETERANS ADMINISTRATION

MORTGAGE BANKER | AUGUST 2022 11

FHA ALSO MYTH-BUSTING

Bell said one of the best ambassadors for the VA loan program are the veterans themselves, from their average credit score of 722 to their average $54,000 in assets. But there are other advantages, including a VA guarantee of 25% of any home loan being guaranteed from default by the government and other filing costs covered by the government that speed up the process and save veterans money. “Our default ratios are among the lowest in the industry,” Bell said. As a veteran himself, Bell can also speak to the value of the program. “I’ve used it five time in my life and I will tell you there were times that I would not have been able to buy a home if it hadn’t been for the VA,” Bell said. But he is quick to add that that is no longer the case and that VA home loans are becoming a product of choice. “This is not ‘I have to go to them because I can’t get a loan anywhere else,’” he said. “This is actually because it’s the lowest rates, the lowest out of pocket costs. From a funding perspective the VA should be the route I go.”

The Federal Housing Administration has also been busy trying to dispel myths about its programs. In June it launched a fourpart series of webinars designed to educate borrowers and lenders about common myths associated with using an FHA-insured loan to purchase a home. The topics include: qualifying for a loan; affording a home; finding the right home; and tips for buying your first home. A few of the myths that the videos take on are: a home inspection is mandatory; you have to have perfect credit; you can’t qualify for a mortgage if you have student debt; and new homes are maintenance-free.

Mortgage Banker asked Bonnie Hochman Rothell, partner, and Jessica A. Rodriguez, associate, at Morris, Manning & Martin, to discuss changes at the Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau seems to be especially busy since 2021 with proposed regulations. What’s driving this activity?

Rohit Chopra, current CFPB director, is leading the charge to increase rules and enforcement actions. He has said the agency will aggressively make and enforce rules to keep financial institutions in check and appears to be carrying out that commitment. The agency has significantly increased its focus on enforcing rules related to fair lending laws as well as violations committed against consumers by payday lenders and debt collectors. Chopra is also seeking to increase access to capital and credit for consumers of all races who have experienced limited access. In addition to an increase in rulemaking and industry outreach, there has also been an uptick in enforcement

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A. The increasing regulations and enforcement by the CFPB are not surprising. The Biden Administration indicated from the beginning that it would aggressively act to “ensure that regulated companies follow the law and meet their obligations to assist consumers during the COVID-19 pandemic.”

Indeed, under the Biden Administration, the CFPB has once again become a federal government priority. In the Biden Administration’s first year alone, the CFPB approved 18 final and interim rules. This number stands in stark contrast to the approval of only 22 final and interim orders during the first three years of the Trump Administration.

REGULATION

CFPB Once Again A Federal Priority IN ADDITION TO INCREASED RULEMAKING AND OUTREACH, THERE HAS ALSO BEEN AN ENFORCEMENT UPTICK. By BONNIE HOCHMAN ROTHELL AND JESSICA A. RODRIGUEZ

MORTGAGE BANKER | AUGUST 2022 13 actions. These increases, however, may be in part because the previous administration was largely inactive in this arena so there is some amount of “clean up” that had to be done by the Biden Administration in its first year. What is some of the activity affecting the mortgage industry in terms of consumers? A. The CFPB finalized several rules meant to help consumers financially impacted by the effects of the pandemic. Earlier in 2021, the CFPB issued a final rule that extends the mandatory compliance date for the Qualified Mortgage Definition rule under the Truth in Lending Act: General QM Loan Definition to October 2022. This delay was an attempt to help consumers by assuring access to affordable mortgage credit and by preserving flexibility.

A. The bureau has necessarily needed to be more proactive rather than reactive for two main reasons. First, the CFPB is coming off a lengthy period of inaction and disengagement. Second, due to new technology as possibly accelerated due to the necessities caused by the pandemic, financial services are now being offered in new manners and by new players, arguably not currently covered by this current regulatory scheme. While some may view this proactive involvement in a positive light, others may view it as a solution in search of a problem in that there do not necessarily appear to be bad actors engaged in predatory practices.

Any issues flying below the radar that people should be aware of? A. Director Chopra and the CFPB have been a topic of much discussion. Not much is flying under the radar at this point as all eyes are on this agency. With that said, it is important to pay attention to the activities that the agency is seeking input on as it is likely that we will see new rulemaking directed at those areas to address the changing industry.

EARLIER IN 2021, THE CFPB ISSUED A FINAL RULE THAT EXTENDS THE MANDATORY COMPLIANCE DATE FOR THE QUALIFIED MORTGAGE DEFINITION RULE UNDER THE TRUTH IN LENDING ACT: GENERAL QM LOAN DEFINITION TO OCTOBER 2022.

Another issue that seems like it would affect the mortgage industry is proposed open banking rules. Reuters has reported they could dramatically boost consumer finance competition and increase Americans’ access to financial services, but changes are being held up by privacy concerns.

The CFPB also finalized a rule that establishes temporary procedural safeguards to ensure that lenders consider loss mitigation opportunities for mortgage borrowers before a loan servicer initiates foreclosure proceedings. Other more recent CFPB rules include adjusting thresholds for various exemptions including consumer credit transactions and appraisals for higherpriced mortgage loans. In addition, early in the administration, the CFPB issued a broad notice and opportunity to be heard inquiring whether consumers had issues with a variety of industries. It is thought that the CFPB may use some of those comments to consider additional rulemaking in the mortgage industry as well as other.

What would the impact be of the CFPB expanding the Community Reinvestment Act to cover nonbank mortgage lenders? Is it practical? A. It would not be practical for the CFPB to extend the Community Reinvestment Act (CRA) to cover nonbank mortgage lenders and to do so would likely be overreaching.

How would you rate Director Chopra’s first six months in office? A. Director Chopra is very active and is certainly reinvigorating the CFPB that the previous administration essentially tried to shut down. He has made huge efforts to study the industry and solicit information about consumer needs and industry concerns relating to over regulation. However, by looking for new issues rather than focusing on the issues that the industry already knows exists, Director Chopra may be spreading the bureau too thin and missing the opportunity to make a significant impact where it is really needed as opposed to where an issue does not exist in the first instance.

The CRA by statute only applies to banks. So, it would require an act of Congress to amend the CRA to include nonbanks. That said, the intent of the CRA is to encourage bank investment through lending and other operations in the low- and moderate-income communities.However,nonbanks currently comprise the vast majority of low and moderate home mortgage loans. So, the intent of the CRA is not necessarily being achieved if the CFPB cannot regulate nonbanks in this arena due to those statutory limitations. To the extent, the CFPB or others are concerned about nonbank predatory lending practices in the low and moderate income communities, it would be best addressed through statute and alternative oversight. One prominent industry official said, when discussing the CRA issue, that the CFPB seems to be looking for solutions in search of a problem. Do you feel that pervades the recent actions? Is the bureau being more proactive instead of reactive?

What is your perspective on this issue? A. The privacy concerns implicated by open banking are certainly real, but open banking also definitely has the potential to boost consumer finance competition. While it seems appropriate for consumers to have access to all their financial data and information as well as the ability to provide others with access to the information for specifically authorized purposes, the flow of this type of information obviously comes with significant consumer privacy concerns. This is in part because banks and other financial institutions typically have stringent but costly cybersecurity and privacy standards that fintech companies often just do not have.

Listen at: podcasts/principalnationalmortgageprofessional.com/ Picture your dream home. Now look down. There’s a bright red line keeping you out. Join host Katie Jensen as we dive into redlining and the legacy of discrimination. You’ll hear first-hand accounts from those who’ve had to fight back to achieve their dreams. And we’ll challenge industry leaders on how to rewrite this legacy.

14 MORTGAGE BANKER | AUGUST 2022 And … Action!

M ortgage News Network’s mission is to use the power of video and podcasts to compliment the written word and inform, educate, enable and empower mortgage professionals with the most relevant, up-to-date information and advances in the mortgage Itindustry.isourgoal to offer worthwhile information to our viewers while delivering it with the utmost professionalism.

Great conversations start with great stories. Tune into The Principal podcast daily for your deep dive into the big issue of the day. Editors, reporters, and sources involved in the day’s top news take on topics with vigor and valor, unafraid to speak openly and honestly, so you get the truth about what’s changing the mortgage market. You’ll get an excellent payback for your time when you listen to The Principal.

Every weekday, we give you a heads up of what should be of interest to you now. The action is fast, and the information is up-to-date. Give us two minutes, and The Interest will give you the big picture. Watch at: nationalmortgageprofessional.com/video

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MORTGAGE BANKER | AUGUST 2022 15 PRODUCTIONS OF AMERICAN BUSINESS MEDIA MORTGAGENEWSNETWORK.COM

I understand that the above three tips were perhaps not exactly what you were looking for and a bit unconventional. But when we view the world with creativity and innovation, things that we thought we knew sometimes become unfamiliar. Yet if you follow all of these tools you are pretty much guaranteed a raise. Because in each case – you will show initiative. And that is the one fool-proof way of consistently receiving a raise no matter what product or service industry you are in. And if you don’t get a raise by practicing the above as a matter of course, perhaps it is time to look for somewhere else to work. Nir Bashan is an all-time Top 100 nonfiction book author and speaker. He helps folks become more creative at work.

1. QUIT COMPLAINING ABOUT WHAT’S WRONG I have hired over a thousand people in my career. I have handed over raises to quite a few of these thousand – and to some? Well, they never managed to get a raise. One of the things that pretty much guarantees that your boss or manager or supervisor will not give you a raise is when you make you mission at work to be a constant “complainy-pants.” It is easy to point out what is wrong. Anyone can do that. It is in our human condition to complain and point out things that are not working. There is a biological reason for this –it is what kept us alive 30,000 years ago when we were living in caves. Yet today? Not super helpful to work. And here’s the thing: Anyone can point out that something sucks. But few people can point out how to solve it. And those are the people who will get a raise.Quit complaining about what is wrong at work, and instead get creative. Point out constructive ways you can help solve what sucks at work. When you can do this consistently, you will find that getting a raise comes easily.

There are tons of books in the marketplace that are geared toward helping you get a raise at work. At last count I took a look on Amazon and found over 2,300 of them. And that was just in the last two years! While most of these books have the same tired advice, I will attempt to offer something new and fresh on this topic. But spoiler alert: you may find the advice unconventional.Becauseitisso easy to blame others when we don’t get a raise, I collected three tools that we can do ourselves in order to position us for a raise. This is not theory or feel-good stuff –it’s three practical tools I have found that are virtually all but guaranteed to get you a raise. And they can easily work to also get you to the next big spot in your career. So here are three creative ways to get a raise at work:

2. DON’T BE ENTITLED Anyone can feel as if they deserve a raise. I woke up this morning and showed up to work. I need a raise now please. It’s easy to get stuck in the trap of entitlement. You have some experience in the field or perhaps you went to a good school, or you made the sale this Thequarter.thing is, if you expect something just because you have done your job, then most managers, bosses and owners just see that as simply part of your job. Nothing less, nothing more. The thinking goes like this: You managed to complete that sale? Well, your job is in sales. So great: you did your job. You managed to have experience in the field? Then great: that’s why we hired you in the first place: Now go do your job. None of these things in and of themselves necessarily qualifies you for a raise. Getting a raise requires creative thinking. Instead of being entitled and expecting someone to give you something, look at what you can give instead. Instead of expecting something, contribute something. When you do this consistently at work, it is hard not to get noticed and you will be rewarded with a raise.

3. BE COOL. BE VERY, VERY COOL People often forget that the boss is a person too. They hold up their manger on an unrealistic pedestal and often forget that managers and leaders have feelings too. They are human beings with the same emotions that everyone on earth has and deal with things in the same way that every human deals with them. Sometimes on an even keel. Sometimes not. Just because they are the boss doesn’t mean that they are superhuman or do not get angry or sad or irrational from time to time. So just be cool. Really. Just be cool.Get creative when things go wrong and keep your cool. Instead of running to your boss every time the coffee machine breaks, screaming that you need your caffeine, try to fix it yourself. Instead of getting mad each time your Teams/ GoToMeeting/Zoom/whatever doesn’t work, try and fix it yourself instead of running to your supervisor, throwing up your hands and saying, “I can’t work like this!” so everyone in the office can hear. Trust me: This has happened to me and it won’t get you a raise. Be cool and try to fix things that go wrong yourself. If you maintain calm on a regular basis while all else around you is chaotic, now that is an in-demand work skill! And it’s so easy to do – just don’t get consumed by the drama or emergency of the moment. Keep your cool and be cool -- believe me this will be noticed and eventually lead to a raise.

A FRESH APPROACH TO IMPROVING YOUR PERSONAL BOTTOM LINE.

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Unconventional Advice For Creatively Getting A Raise CAREERS NIR BASHAN

By NIR BASHAN, CONTRIBUTING WRITER, MORTGAGE BANKER MAGAZINE

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Qualia Unveils Qualia Connect for Mortgage Lenders Qualia, a digital real estate closing platform, announced the release of a new mortgage lender edition of Qualia Connect to its platform. This suite of features provides lenders with complete control over how they collaborate securely with any title, settlement, or escrow partner. Connect now integrates directly into the mortgage lender’s loan origination system (LOS) to enable more efficient, predictable, and transparent closing experiences for lenders and their borrowers.

18 MORTGAGE BANKER | AUGUST 2022 TECHNOLOGY ROUNDUP

Leveraging RiskSpan’s universe of forward-looking analytics, subscribers can generate valuations, market risk metrics to inform hedging, credit loss accounting estimates and credit stress test outputs, and more. Sharing portfolio snapshots and analytics results across teams has never been easier.

Qualia is positioned to support lenders in solving this painful and expensive closing problem. Qualia’s title, settlement, and escrow platform are used by cross functional teams to process millions of home purchases and refinances each year. Qualia Connect’s integration between the LOS and the nationwide settlement ecosystem allows lenders to automate and standardize the way they work with any title company in the country. By doing so, lenders get unprecedented visibility to stay ahead of costly delays and errors. Lending teams can also ensure that they maintain control of the borrower experience from order opening through post closing. This is consistent no matter what transaction type, closing location, or closing parties they work with.

“Lenders themselves have historically relied on a wide array of solutions to attract, convert and engage native Spanish-speaking communities. Some of these solutions include on-staff or contracted Spanish speakers, community outreach, as well as mobile-oriented messaging, and social media engagement. These lenders now have a suitable solution to fulfill their promise of affordability & accessibility for a rapidly growing market,” says John Paasonen, CEO of Maxwell. Leveraging a community-oriented approach,

Maxwell, the mortgage fintech solutions platform designed exclusively for small to midsize lenders, announced the launch of its Spanish-language Point of Sale platform targeted at lenders currently serving and expanding into America’s Hispanic communities.

Onclosed.the borrower side, the POS guides individuals with limited English proficiency through the entire application, from landing page to submission, in Spanish. On the back end, loan officers retain powerful features like QuickApply or FileFetch, and can continue to work in English without interruption to their workflow.

DataVerify Announces DataVerify Assist, An AI Enhanced Lending Solution

DataVerify—a provider of data verification, risk mitigation and workflow automation services— announces DataVerify Assist, its AI lending automation solution. The product is expected to help lenders with the assembly of loan documentation and the automation of classification, extraction, and Theversioning.DataVerify Assist technology, powered by TRUE, is designed to be a touchless automation solution that can help lenders reduce their turnaround times by accelerating the document identification and data extraction process. DataVerify Assist uses computer vision and machine learning technology to analyze and organize data, and deliver verified results in minutes reducing the processing time. “Lenders are facing a growing list of concerns as they go about digital transformation. They’re looking for solutions that will significantly improve their workflow, reduce the need for human intervention, and continue to protect their portfolio,” said Brad Bogel, president of DataVerify. The addition of their new AI solution is expected to significantly advance many of the automation tools that lenders are already using in their loan manufacturing process. DataVerify Assist boasts powerful data extraction accuracy and patentpending cross-validation technology to assist the lender by reducing potential compliance issues and allowing for automated reconciliation of structured data to source documents.

Maxwell Announces Spanish Loan Application Platform

This solution comes at a critical time for US Hispanic homeownership, which is set to represent 56% of all new homeowners in 2030, according to data by Freddie Mac. However, existing Point of Sale solutions, which are the primary means for lenders to engage with borrowers, are often haphazard and require significant effort from both the loan officer and the borrower. The complex nature of mortgage loan applications, including niche terminology, and the vast number of documents required to complete them, poses a significant challenge to native Spanish speakers, limiting access to homeownership and its proven wealth-building capabilities. In fact, Limited English Proficiency (LEP) is one of the most significant barriers to homeownership among Hispanic Americans, seconded only by credit score challenges.

”Collaboration between everyone in the closing process remains very manual, inefficient, and unpredictable today,” said Nate Baker, CEO and cofounder of Qualia. ”We are building products that go beyond just digitizing old processes. Products like Connect work alongside the LOS to reengineer how teams work together in a way that fundamentally transforms how homes are bought and sold.”

Media Effect – It has long been accepted that prepayment speeds see an extra boost as media coverage alerts borrowers to refinancing opportunities. Now, Edge lets traders and modelers measure the media effect present in any active pool of Agency loans—highlighting borrowers most prone to refinance in response to news coverage—and plot the empirical impact on any cohort of loans. Developed in collaboration with practitioners, it measures rate novelty by comparing rate environment at a given time to rates over the trailing five years. Mortgage portfolio managers and traders who subscribe to Edge have always been able to easily stratify mortgage portfolios by refinance incentive. With the new Media Effect filter/ bucket, market participants fine tune expectations by analyzing cohorts with like media effects. Predictive Analytics for Managed Data – Edge subscribers who leverage RiskSpan’s Data Management service to aggregate and prep monthly loan and MSR data can now kick off predictive analytics for any filtered snapshot of that data.

RiskSpan offers cloud-native SaaS analytics for ondemand market risk, credit risk, pricing and trading. With our data science experts and technologists, we are the leader in data as a service and end-toend solutions for loan-level data management and analytics.

According to STRATMOR Group’s MortgageSAT Borrower Satisfaction Program survey, inaccuracies at closings can cause a harmful 81-point drop in a lender’s borrower NPS, leading to loss of future business. These types of closing issues tend to increase when lenders are unfamiliar with how their closing counterparts operate and lack control of their preferred closing process. With today’s market conditions, lenders are seeing more business from purchases than refinances, which puts them further at a disadvantage when it comes to maintaining control of the borrower experience.

Loan Officers using the Maxwell Point of Sale can now choose to enable a Spanish-language loan application to help serve the growing segment of Hispanic borrowers fulfilling the financial dream of homeownership. The result is an optimum experience for both loan officers and their borrowers, characterized by increased efficiency, communication, and the potential for more loans

RiskSpan Introduces Media Effect Measure for Prepayment Analysis, Predictive Analytics for Managed Data RiskSpan, a provider of residential mortgage and structured product data and analytics, has announced a series of new enhancements in the latest release of its Edge Platform.

“It’s no longer enough to rely on automation in only certain parts of the workflow. Lenders need solutions that help them in various ways throughout the entire life cycle of a loan. We believe that DataVerify Assist is going to offer lenders automation on a scale that they have not been able to access previously and we are very proud to bring this solution to the marketplace,” said Bogel.

MCT’s objective is to ensure that its software additions drive more profitability and increase efficiency. With MCT’s new API, users can effectively develop a pricing strategy that includes key loan-level characteristics, such as property location, FICO, loan-to-value (LTV), and much more in real-time to evaluate a comprehensive set of data that contributes to a winning pricing strategy.

New MSR Technology Empowers Buyers With Live Loan-Level Pricing

The key takeaway of this new functionality is how it informs users and helps servicing buyers avoid overpaying for potentially underperforming assets.

Real estate lenders who leverage the AppraisalWorks appraisal management platform for Freddie Mac’s new ACE+ PDR (automated collateral evaluation plus property data report) offering, benefit from the innovation of appraisal modernization that can result in quicker turn times, mitigation of risk, reduced cost and the advantage of a robust panel, ready at your fingertips to fulfill orders. And for lenders already utilizing AppraisalWorks appraisal management technology, they can continue to benefit from streamlining administration of all real estate appraisal services, including management of vendor panels, onto one single platform. “AppraisalWorks supports all aspects of appraisal modernization – from the new ACE+ PDR offering to Desktop and Hybrid appraisals in addition to traditional appraisal products, evaluations, and valuation solutions including Automated Valuation Models (AVMs),” said Ben Wiant, vice president of AppraisalWorks. “With AppraisalWorks, lenders will find the right valuation product for their specific need each time and a diversity of available vendor options to choose from, or, if a lender prefers not to manage their vendor panel, there is the option to utilize one or more of the growing number of appraisal management and inspection services companies available on the AppraisalWorks platform.”

Mortgage Capital Trading, a mortgage hedge advisory and secondary marketing software firm, has announced a new technology for mortgage servicing rights (MSR) buyers to produce more granular pricing for mortgage servicing. The feature leverages an application programming interface (API) to connect MSRlive!, MCT’s MSR valuation platform to clients’ systems for more precise and accurate loan-level pricing in real time.

OrangeGrid, a provider of mortgage servicing software, has launched its loss mitigation initiative to enable the company to provide more focused default servicing capabilities to the mortgage servicers. The initiative is designed to offer its users the ability to quickly scale up when facing sudden increases in the number of default servicing requirements without having to hire large numbers of new staff.

Polly Introduces New Product Change Functionality To Further Streamline, Automate Lock Desk Processes Polly, a provider of SaaS technology for the mortgage capital markets space, announced a new post-lock product change function to its lock desk workflow automation suite. Polly launched its modern Product and Pricing Engine (PPE) with embedded, flexible automation—including locks, lock extensions, re-locks, re-prices, price exceptions, float downs, and more—that can align with any pricing policy and significantly improve both lender and process efficiencies. However, the dynamic lending environment of today has surfaced a new common necessity within a lender’s workflow: the need to change a product due to borrower or property eligibility. Via its cloud-native, high-performance infrastructure, Polly has introduced a new, first-of-its-kind product change function that delivers granular post-lock transparency and the ability to take action, modifying product type and term combination(s) to another as needed, be it historical pricing, worse case, or current market.

OrangeGrid Launches Loss Mitigation Initiative

AppraisalWorks Announces Flagship Platform Supports ACE+ PDR AppraisalWorks, a provider of real estate appraisal technology, announced its flagship AppraisalWorks appraisal management platform was verified by Freddie Mac, and added to the company’s list of software partners.

According to ATTOM’s recent Foreclosure Market Report there were a total of 30,881 properties in the United States with foreclosure filings in May 2022 including default notices, scheduled auctions or bank repossessions. That coupled with the number of nearly 1.7 million properties that are 30 or more days past due, according to Black Knight Data, the need for quickly launching automated solutions in default loan servicing is paramount. OrangeGrid is tackling loss mitigation as it is one of the first process management needs in the default loan servicing OrangeGridlifecycle.isnow capable of offering its users the ability to quickly scale up when facing a sudden increase in the number of default servicing requirements without having to hire large numbers of new staff. The solution enables servicers to use a single solution to conduct all its loss mitigation process and production management needs without having to rely on IT departments for customizations or keep up with ever changing regulatory requirements from agencies such as the CFPB. It also creates an eco-system of convergence for all data from a variety of sources, including many popular legacy systems, used in the servicing of mortgage “OrangeGridloans.provides

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Maxwell consulted its in-house group of Hispanic American processors and underwriters in order to not just strengthen the cultural context, but also retain any industry-specific context and nuance. The end result is a welcoming borrower experience that lends cultural empathy to Hispanic Americans who are constantly navigating LEP, and a fully-compliant lender POS system that accounts for all URLA and MISMO 3.4 requirements and utilizes seamless integration to populate loan files, in English, directly in the LOS.

“The competitive landscape has exposed the challenges with applying static multiples across all LTVs and FICOs and has heightened the importance of a more strategic pricing strategy,” shared Bill Shirreffs, head of MSR services and sales operations at MCT. “MCT’s MSRlive! API is specifically designed to provide granular, loan-level, MSR pricing based on your cost assumptions and return expectations.”

By adding this function to its existing automationenabled lock desk workflows, Polly has further streamlined processes for the lock desk, secondary marketing and capital market teams, and loan officers alike. For lock desk users, automation provides a better overall experience as it is designed to eliminate error and promote precision and accuracy at a time when margin compression is Similarly,vital. automation grants lenders and loan officers a competitive advantage by increasing their efficacy and enabling them to focus on providing an optimal borrower experience. Product change automation is also extremely useful for lenders with numerous products, as it makes it easy to categorize and display specific relationships, calculate pricing, and more.

The software provides a more prudent, thoughtful, and strategic approach achieved by leveraging a granular set of data which will result in fewer missteps. The system’s functionality provides insight for the servicing buyers to ensure that the pricing levels on a loan-by-loan basis are appropriate and justified.

innovative mortgage servicers with the ability to easily scale up when dealing with a sudden surge in loss mitigation cases,” said Todd Mobraten, OrangeGrid’s CEO and founder. “Our comprehensive default suite provides process and exception management capabilities offering dynamic workflows, dynamic dashboards, and configurable workflows to give users the ability to handle higher volumes of mortgage servicing duties more efficiently.”

How Mortgage Tech Innovation Will Enable Future Real Estate Transactions

REGULATION NATE

Mortgage technology is one of the most important components of the real estate transaction’s digital transformation. Since real estate professionals and title and settlement providers work closely with lenders to facilitate transactions, staying close to and investing in mortgage technology provides insight into how each may need to evolve to serve customers better in the future. Through our venture arm, Parker89, and other efforts, First American is playing a key role in supporting the digitization and modernization of the mortgage process. Given the elevated interest rate environment and recent cooling of the venture capital market, there may be skepticism about new mortgage technology companies at this time. We believe, however, that mortgage technology startups with strong growth metrics and experienced teams will continue to find traction. The problems these companies are solving are systemic in the mortgage process, versus cyclical, and therefore are pertinent no matter the macroeconomic picture. Furthermore, as lender profit margins shrink in the current environment, we expect there to be added focus from lenders on finding ways to create differentiation and operational efficiency, which is where these new technology companies are focusing their efforts. We think about the mortgage technology space as being composed of the following three categories: mortgage software used to enable originations, tech-driven mortgage originators, and “power buyers.”

INNOVATION IS NEEDED IN THESE AREAS AND THE OPPORTUNITY IS SIGNIFICANT.

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The mortgage software space can itself be broken down into three areas: (1) point of sale (POS) and lead generation or other technologies that sit at the top of the customer acquisition funnel; (2) back-end enabling infrastructure; and (3) capital markets and servicing. In the POS category, the top of the customer acquisition funnel has been the lowest hanging fruit for innovation and, as a result, the space has largely been saturated LEVIN

By NATE LEVIN, CONTRIBUTING WRITER, MORTGAGE BANKER MAGAZINE

SOFTWAREMORTGAGE

POWER BUYERS

Tech-enabled mortgage originators saw significant venture capital investment activity from 2019 through 2021. These startups were heavily focused on innovating in the refinance arena because of the tremendous growth in refinance transactions in 2020 and 2021, and because refinance loans are operationally easier to originate and don’t require the involvement of real estate agents in the transaction. However, many of these companies have been challenged with the precipitous drop in refinance volume in 2022.

Venture-backed companies offering “power buyer” solutions have garnered a significant amount of attention and funding over the past couple of years. As multiple-offer bidding wars have become increasingly common in competitive real estate markets, home buyers using traditional mortgages have found it difficult to compete against cash offers. In addition, sellers who are also buying (dual trackers), have challenges lining up their new home mortgage before completing the sale of their existing home and the payoff of their existing home mortgage.Powerbuyer companies help home buyers facing these problems. These companies enable buyers to use a traditional mortgage to make cash offers on homes, which are backed by innovative financing methods. They also help dual trackers coordinate the timing between the sale of their existing home and the purchase of a new one. Given the broad applicability of powerbuying products and varying approaches of companies in the space, there could be multiple winners. As such, Parker89 has made multiple investments. Knock and Orchard both offer power buyer services via their lending arms (although Orchard’s is linked through its W-2 brokerage model), and Ribbon uses innovative debt financing and their industry network to enable real estate agents and lenders to offer power buying to consumers via the lender of their choice.Even as transaction volume declines with rising interest rates, cash offers enable bidders to win with lower offers, so we expect demand for these products to remainDespitestrong.the current transition in the housing market, the trend toward a more digital real estate transaction will continue to build momentum in the months and years ahead. Forward-thinking real estate professionals and title and settlement providers will recognize the opportunity to work with lenders to continually enhance the real estate transaction and make sustained, long-term investments in innovations that drive the industry’s future.

Although these new servicing technology players will likely continue to grow their adoption over the long term, they will be slower to scale given high switching costs, compliance requirements, and long sales cycles. ServiceMac, which is a sub-servicer that’s part of the First American family of companies, gives us strong insight into this market and its latest trends. Ultimately, innovation in the mortgage software space is critical to improving the customer experience across the board, and it will help small- and medium-sized originators enjoy the efficiencies that larger originators realize from their scale and custom-built software.

Nate Levin is managing director at Parker89, First American’s venture capital arm MEDIUM-SIZED

by a number of early movers. We haven’t seen many new mortgage startups with truly innovative technology enter this space recently.Back-end enabling infrastructure includes loan origination software (LOS), underwriting, appraisal, and eClosing. This is a more challenging space to build upon and innovate within because of the complex workflows, well-entrenched incumbents, high cost and difficulty of switching providers, and heavier regulatory and compliance requirements. However, innovation is needed in these areas and the opportunity is significant. As venture capital dollars flowing into the mortgage software space have grown, we’ve seen that the most promising companies are those led by founders who have come from other mortgage technology companies and possess deep expertise in both mortgage and technology. That may explain why venture activity in back-end infrastructure has increased in the past couple of years, as more knowledgeable mortgage investors pair with strong founders who have the requisite experience. Parker89 has invested in Notarize, which offers remote online notarization and recently funded Vesta in this space. Vesta has built a new, open LOS, which functions as a system of record and workflow tool, saving significant time for processers, underwriters and closers. At the so-called “end” of the mortgage value chain, Parker89 recently funded Polly, which has built modern capital markets software, including pricing, hedging and best execution analysis tools. Servicing however, which is a $12 trillion market, may be the most challenging area in mortgage from an innovation perspective. We have yet to see a new venture-backed tech company in this space gain significant traction. However, we’re witnessing more and more innovation here and some novel go-to-market approaches (e.g., loss mitigation, interim servicing, full-stack servicing, etc.).

ORIGINATORS ENJOY THE EFFICIENCIES THAT LARGER ORIGINATORS REALIZE FROM THEIR SCALE AND CUSTOM-BUILT SOFTWARE. MORTGAGE BANKER | AUGUST 2022 21

INNOVATION … WILL HELP SMALLAND

TECH-ENABLED MORTGAGE ORIGINATORS

Parker89 recently invested in Tomo, a startup company with a lot of promise in the tech-enabled mortgage space. Unlike the refinance-driven originators, Tomo is focused purely on purchase mortgage transactions. They rely heavily on product differentiation and are building relationships with real estate agents, which we view as a more sustainable, long-term customer acquisition strategy. Our investment in Tomo reflects our belief that creating consistency and predictability in the purchase lending process through the use of technology will drive a noticeably better experience for real estate professionals and home buyers alike.

• Competitive and consistent pricing

• Good products

LENDERS

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The Latest Trends In Signing Bonuses

• Shifts focus away from the value proposition to loan officer, including:

• Perpetuates transactional relationship and free agent mindset

• Dubious ROI — there are markets where profit levels can support signing bonuses, but this can change quickly, as Cameron is seeing in 2022. In his article, Cameron outlines the most common structures used to pay signing bonuses and how lenders can claw back some of this advance if the loan officer doesn’t perform or gets recruited away. He also looks into the financial considerations for the lender, especially in a market with declining loan volumes. His advice: make your decisions on the basis of better data. STILL NEED AND WANT HIGH-PRODUCING, PURCHASED-FOCUSED LOAN OFFICERS.

MANY LENDERS DO NOT PAY SIGNING BONUSES

• Superior sales support

• Excellent sales and marketing technology tool

Even in today’s challenging market, high-producing loan officers remain in high demand, according to mortgage advisory firm Stratmor Group. Recruiting them often comes down to the quality of the offer a lender can make. In its July Insights Report, Stratmor Group Senior Partner Jim Cameron analyzes the industry’s approach to signing bonuses, offering insight into why some lenders pay and others do not. His article, entitled “To Pay or Not to Pay: The Question of Signing Bonuses,” explores how signing bonuses are structured, and how new data and tools can help lenders understand more about the potential of the loan officers they are hiring. “It’s no secret that our industry is experiencing a very challenging market right now. We are seeing layoff announcements practically every day, and there are already a handful of companies shutting down,” Cameron writes in his article. “M&A activity has exploded as the industry begins to consolidate. We are in a classic downcycle with too many lenders chasing too few loans.”

In his report, Cameron says in his experience, many lenders are philosophically opposed to the notion of signing bonuses. While this may cause them to miss out on recruiting certain high producing loan officers, there are key reasons why they resist the temptation:•Negative impact on current employees

• Manufacturing process

Despite all of this, lenders still need and want high-producing, purchased-focused loan officers (LOs). Recruiting them will depend, in part, upon compensation. For high producers, signing bonuses have been a big part of the story. Cameron says that will continue, but more for some lenders than others. For example, independent mortgage bankers (IMBs), and especially large IMBs, are more likely to pay signing bonuses to retail loan officers for several reasons. Signing bonuses do not match up well with the typical bank culture.“Inour experience, IMBs are more likely to ramp up and down aggressively as market conditions ebb and flow,” Cameron says. “They must — it’s a matter of survival. But banks don’t like to operate with an easy come, easy go, hire and fire mentality. It is well documented that banks have lost market share to IMBs and there are many reasons for this. The lack of willingness to pay top dollar for high producers is one of them.”

PERSONNEL

• Culture of company

• Tenure — If the LO has only been with the company for a relatively short time and perhaps came in with a signing bonus, the lender may be less inclined to offer a retention bonus.

• Performance — Historical volume originated, purchase vs. refinance mix, profitability of loans produced, qualitative feedback based on interactions with others, etc.

RETENTION BONUSES — WHAT ARE THEY AND WHY PAY THEM? In his report, Cameron also looks at retention bonuses. He says, “As the name implies, lenders are compelled to pay retention bonuses when they feel that an employee may be at risk of being hired by a competitor. On the sales side, this often arises when a high-producing loan officer receives an offer which includes a signing bonus.”The retention structure may include a combination of bonus and an increase in basis points of commission for a finite period. In many cases, the LO does not want to leave his/her company but has received a sizable offer that is worthy of serious consideration. Since the LO often wants to avoid the risk of switching employers, there may not be a need to match the competing offer one for one. Cameron explains, “Of course, not every competitive situation results in the payment of a retention bonus. The lender is at an advantage here because they have data on the LO which allows for an informed decision.” Factors considered in payment of retention bonuses include the following:

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• Influencer Status — Is the LO a key influencer with the rest of the sales force? Would their departure have a damaging ripple effect? As one might expect, we are hearing that retention bonuses are on the decline as the frequency and level of signing bonuses has fallenCameronoff. uses Stratmor data to show how signing bonuses are easy to justify in a market with wide profit margins and high volume. Lenders paid large signing bonuses in 2020 and 2021 and he concludes that it likely made sense at that time. But the current market is quite different. Volumes are down at least 50% for many lenders, and profits have deteriorated such that breakeven may be aspirational at this point. Even so, leaders will find a way to attract the best producers and signing bonuses will be one of their tools.

“In the old days, lenders would rely on reviewing W-2 information and screenshots of production information from prospective LOs,” Cameron writes. “Since the LO’s license number is now attached to fundings, there is a wealth of data available to better understand important considerations, such as purchase versus refinance mix, product mix and production volume trends.”

“IT IS WELL DOCUMENTED THAT BANKS HAVE LOST MARKET SHARE TO IMBS AND THERE ARE MANY REASONS FOR THIS. THE LACK OF WILLINGNESS TO PAY TOP DOLLAR FOR HIGH PRODUCERS IS ONE OF THEM.”

JAN 12–13 2023 New England’s top gathering for mortgage professionals returns to Connecticut on January 12–13, 2023. Don’t miss this exciting, informative event. NMP readers like you can attend for free by using the code NMPOCN. Complimentary registration available to NMLS-licensed active LOs and their support staff. Show producers reserve the right to determine final eligibility. www.nemortgageexpo.com Produced ByTitle Sponsor ORIGINATORCONNECTNETWORK.COMNEWMORTGAGENGLANDTHEE

Gregory S. Graham Co-Managing Partner ggraham@bmandg.com 972-353-4174

LEGAL

Mitch Kider is the Chairman and Managing Partner of Weiner Brodsky Kider PC, a national law firm specializing in the representation of financial institutions, estatehomebuilders,residentialandrealsettlementservice providers. Mitch represents banks, mortgage companies, homebuilders, credit card issuers, and other financial service companies in a broad range of litigation and regulatory and compliance matters. He defends clients in investigations and enforcement actions before the Consumer Financial Protection Bureau, Department of Housing and Urban DepartmentDepartmentDevelopment,ofJustice,ofVeterans Affairs, Federal Trade Commission, Fannie Mae, Freddie Mac, Ginnie Mae, and various state and local regulatory authorities and Attorneys General offices. In addition, Mitch acts as outside general counsel to smaller companies and special regulatory and litigation counsel to Fortune 500 companies.

MORTGAGE BANKING LAWYERS

Mr. Graham is also currently licensed to practice law in Georgia and has been since 2017. He received his Juris Doctor degree from Southern Methodist University School of Law in 1989 after receiving a Bachelor of Arts cum laude from UT Dallas.

James W. Brody, Esq. Mortgage Banking Practice Group Chair jbrody@johnstonthomas.com 415-246-3995

James Brody actively manages all the complex mortgage banking litigation, mitigation, and compliance matters for Johnston Thomas. Mr. Brody’s experience centers on those legal issues that arise during loan originations, loan purchase sales, loan claims.repurchaseforeclosures,securitizations,bankruptcy,and&indemnificationHereceivedhisB.A.in

International Relations from Drake University and received his J.D., with a certified concentration in Advocacy, from the University of the Pacific, McGeorge School of Law. He was a recipient of the American Jurisprudence BancroftWhitney Award. He is licensed to practice law in California and has been admitted to practice in front of the United States District Courts for the Central, Eastern, Northern, and Southern Districts of California. In addition, Mr. Brody has served as lead litigation counsel for numerous mortgage banking and commercial related disputes venued in both state and federal courts, in a direct capacity or on a pro hac vice basis, in AZ, CA, FL, MD, MI, MN, MO, OR, NJ, NY, PA, TN, and TX. Marty Green marty.green@Attorney 214-691-4488mortgagelaw.comext203

Marty Green leads the Dallas office of Polunsky Beitel Green, one of the country's top residential mortgage law firms. Mr. Green is an accomplished attorney with more than 20 years of experience in the legal, banking and financial services industries. He is the former Executive Vice President and General Counsel for Dallas’ CTX Mortgage Co. and previously worked with the Baker Botts law firm in Dallas as Special Counsel. In his role as leader of the firm’s Dallas office, Mr. Green advises clients on the latest rules and regulations covering residential lending, in addition to building on Polunsky Beitel Green’s long tradition of delivering loan closing documents with speed and accuracy. Mr. Green is admitted to practice before all Texas state and federal district courts in addition to the U.S. Court of Appeals for the Fifth Circuit. An honors graduate of the University of Texas School of Law, he earned his undergraduate degree at Southern Utah University. Texas Monthly has selected him as a Super Lawyer multiple years.

Mr. Graham’s affiliations include the Dallas MBA, where he previously served as a Director & Chairperson of the Legislative Committee; DFW Mortgage Brokers Association, where he previously served as Legal Counsel; MBA; NAMB; Texas AMB prior to its closure; and Texas MBA. Scott L. Luna Partner sluna469-730-4607@ravdocs.com Scott Luna’s practice is focused on real estate law with an emphasis on mortgage document preparation and land title issues. Scott managed a successful multistate highvolume title and document preparation business for over 20 years before joining RAV and is recognized throughout the real estate legal community for his expertise. As a past President of the Oklahoma Land Title Association, Scott’s ongoing involvement in the industry adds to his wealth of title-related knowledge. Scott received his Juris Doctor degree from the University of Tulsa College of Law in 1991 after receiving his Bachelor of Science degree from Texas A&M University. Scott is currently licensed in Texas, Oklahoma, Missouri, Minnesota, Nebraska, and Kentucky.

Black, Mann & Graham CoManaging Partner Gregory S. Graham has practiced in the areas of real estate, litigation, and bankruptcy law since 1989, and is currently licensed in Texas and admitted to practice before the United States District Courts for the Northern and Eastern Districts of Texas.

MORTGAGE BANKER | AUGUST 2022 25

These attorneys are universally recognized by their peers as setting the highest standard for the legal profession, excelling in all fields — knowledge, analytical ability, judgment, communication, and ethics.

Mitchel H. Kider Managing Partner kider@thewbkfirm.com202-557-3511

26 MORTGAGE BANKER | AUGUST 2022 MortgageBanker MAGAZINE

MORTGAGE BANKER | AUGUST 2022 27 DATABANK

NOV 8 2022 Texas’s top gathering for mortgage professionals returns to Houston on November 8, 2022. Don’t miss this exciting, informative event. NMP readers like you can attend for free by using the code NMPOCN. Complimentary registration available to NMLS-licensed active LOs and their support staff. Show producers reserve the right to determine final eligibility. www.txmortgageroundup.com Produced ByTitle Sponsor NMLS RENEWAL CLASS NOV. 9 ORIGINATORCONNECTNETWORK.COMTE XA S MORTGAGE ROUNDUP

SPECIAL ADVERTISING SECTION: NON-QM LENDER DIRECTORY COMPANY AREA OF FOCUS STATES LICENSCED WEBSITE Arc Home LLC Multi-channel mortgage leader with exceptional service and comprehensive mortgage solutions. AL, AK, AZ, AR, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY business.archomellc.com Carrington Wholesale Full suite of Non-QM Loan solutions. 47 States (excluding NH, MA & ND) carringtonmh.com Verus CapitalMortgage Full-service correspondent investor offering residential Non-QM and investor rental programs Continental U.S. verusmc.com SPECIAL ADVERTISING SECTION: PRIVATE LENDER DIRECTORY COMPANY AREA OF FOCUS WEBSITE Patch Lending Private Lending for Real Estate Investment Properties patchlending.com Stratton Equities Nationwide Direct Hard Money & NON-QM Lender strattonequities.com SPECIAL ADVERTISING SECTION: ORIGINATOR TECH DIRECTORY SPECIAL ADVERTISING SECTION: WHOLESALE LENDER DIRECTORY COMPANY AREA OF FOCUS WEBSITE Global DMS Appraisal Management Software globaldms.com COMPANY AREA OF FOCUS WEBSITE FirstFunding Inc. Warehouse lines to correspondent lenders, community banks, credit unions, and secondary-market investors. firstfundingusa.com

PRIVATE LENDER RESOURCE GUIDE Alpha Tech Lending West Hempstead, New York DSCR Rental NO DOC Loans Alpha Tech Lending is a trusted direct lender, with over a combined 30 years of experience in the private lending sector. We offer a variety of loan programs for non-owner-occupied residences that are customizable to suit your real estate investment needs. From fix and flips, long term rental, new construction, commercial bridge, and more. We lend to both new and experienced real estate professionals throughout the country. We value long term relationships built on trust. Our brokers are info@alphatechlending.comalphatechlending.comprotected.(888)276-6565 LICENSED IN: CT, DC, DE, FL, GA, IL, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA Stratton Equities Pine Brook, NJ Stratton Equities is the leading Nationwide Direct Hard Money & NON-QM Lender that specializes in fast and flexible lending processes. Our Hard Money and Direct Private Money loan programs support the following investment projects: No Upfront fees! No Junk Fees! No Taxinfo@strattonequities.comReturns!strattonequities.com(800)962-6613 LICENSED IN: All States except for: AK, ND, NV, SD, UT • Fix and Flip • Soft Money Loans • Cash Out Refinance— • Fixed LoansCommercial • BridgeCommercialLoans • Bridge Loans • Stated VerificationNo-IncomeIncome/Loans • Rental Loans • BailoutForeclosureLoan • NO-DOC • Blanket Loans • Fixed ProgramsRental • Multi-Family Loan Find the full list of Private Lenders on page 48 NON-QM RESOURCELENDERGUIDEFirstFundingInc. Dallas, TX FirstFunding, Inc. offers warehouse lines to correspondent lenders, community banks, credit unions, and secondary-market investors. FirstFunding is a Top Ten Warehouse Lender dedicated to the growth of the correspondent channel leveraging innovative technology and strategic partnerships to the benefit of our clients. FlexClose Funding! Fund outside the Fed wire restrictions. Ease of use (Support staff, technology an other tools to support mortgage bankers) FirstFunding’s FlexClose Funding program allows our clients to fund outside the Fed wire restrictions. Same day and after-hours funding. Browser-based proprietary platform, customized reporting tools, and a dedicated customer service team. Minimum Line Size (Dollar) $1,000,000.00 Maximum Line Size (Dollar) $100,000,000.00 Net Worth Requirement $75,000 Products Allowed Conventional Conforming, Jumbo, FHA, VA, USDA, Non-QM Fees Competitivefirstfundingusa.com(214)821-7800customerservice@firstfundingusa.com

MORTGAGE BANKER | AUGUST 2022 31 NON-QM RESOURCELENDERGUIDECarringtonWholesale Anaheim, CA The Carrington Advantage Series is a full suite of Non-QM Loan solutions that “Delivers More” for you and your borrowers. Ideal for borrowers, like the self-employed, that don’t fit Agency or Government Qualified Mortgage standards based on credit quality, property type, documentation type, income documentation, or other borrower situations. • FICOs 550+ • Primary wage earners FICO • DTIs up to 50% • Bank Statements (personal or business) accepted • We don’t require disputed tradelines to be removed With the Carrington Investor Advantage (DCR) • DCR down to .75 • First-time investors are ok • Only 48 months seasoning for major credit events • 1x30x12 mortgage history rodney.ashton@carringtonmh.comcarringtonmh.comok(866)453-2400 LICENSED IN: 47 States (excluding NH, MA & ND)